Renters are Spending More on Rent Than at Any Time in Past 30 Years

Renters are Spending More on Rent Than at Any Time in Past 30 YearsRapidly rising rents and stagnant incomes have transformed the for rent market into the most expensive landscape over the past 30 years.
The real estate site Zillow looked at how much of a household’s monthly income is spent on rent (excluding utilities and other costs).
Spending on rent is measured by the Zillow Rent Index, which tracks the monthly median rent in particular geographical regions.
“Historically in the United States, the median household would need to spend 24.9 percent of their income to afford the rent on the median property. Currently that number stands at 29.6 percent,” writes Real estate researcher Krishna Rao in a post for Zillow.
This means that renters across the nation are currently spending almost 19 percent more of their incomes on rent than they did in the pre-bubble period between 1985 and 2000.
Some parts of the country, such as Los Angeles, Miami and San Francisco, the average household would need to spend over 40 percent of their income to rent the average home.
Nationally, the share of income that households must devote to rent has increased steadily and consistently since 2000, as the increase in rent has dramatically outpaced the growth in income over the same period, said Rao.
Over the period from 2000 to 2014, median household income has increased by 25.4 percent, while rents have increased over 52.8 percent, more than twice as much.
“On the heels of our recent analysis showing the erosion of affordability of homes for purchase, this represents even more bad news for those looking for housing,” said Rao.
The goal for renters is to keep housing costs, including utilities, to under 30 percent of their income after taxes. However, rising rents have meant that in a number of places, rent alone will cost the average household more than 30 percent of their income, even before taxes and the cost of utilities are included. And the price of utilities are increasing too, further adding to this problem. This is especially a problem for those who are retired, as money may be tight. Electricity Monster have a complete Electricity Guide After Retirement for those in Australia who have retired and want to save money on their utility bills. As a retired person, you may be surprised at some of the concessions you could qualify for. For some renters and landlords, considering the rent to rent strategy of property investment might be a way forward for them to ease the workload for landlords while offering tenants a reduced rate. It is worth doing further research on because it isn’t for everyone.
See chart below from Zillow:
Renters are Spending More on Rent Than at Any Time in Past 30 Years

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